AOL will retain a licence for the patents and return a 'significant portion' of the sale proceeds to shareholders

AOL is to sell more than 800 technology patents and related applications to Microsoft for about $1.1bn (£690m), in the latest land grab in an increasingly expensive battle for intellectual property.

AOL, facing pressure from unhappy shareholders, said it would return a "significant portion" of the sale proceeds to them. "The agreement with Microsoft represents the culmination of a robust auction process for our patent portfolio," said the chief executive, Tim Armstrong.

Patents are becoming increasingly hot properties as companies battle over the technology underpinning smartphones, social networks and tablet computers.

Google has struck the biggest deal so far, announcing plans last year to buy Motorola Mobility for $12.5bn, largely for its portfolio of mobile patents.

Samsung and Apple are engaged in a court battles around the world over who owns which patents relating to Apple's iPhone 4S, iPad and Samsung's Galaxy Nexus.

"Many of these patents relate to fundamental online communication technologies, stemming from AOL's early dominance in the instant messaging and email markets," the patent analyst Envision IP wrote in a blogpost.

AOL has not said exactly what the patents cover. Under the terms of the transaction it will retain a licence for them.

The deal may come as a useful reprieve for Armstrong, who is facing pressure from the activist investor Starboard Value. Starboard is mounting a proxy campaign to win seats on AOL's board, and has been critical of Armstrong's decision to focus the firm on online media such as the Huffington Post, which it acquired last year for $315m.